Why do borrowers invest in such income properties ?
There are seven main reasons, which prompt borrowers to invest in such properties. a. Most of income properties generate monthly incomes, which can be utilized to pay monthly mortgage charges, if any, taken for purchasing the income properties. Therefore, interest cost of purchasing such asset is negligible. b. Such properties serve as a method for speculation in real estate. Investors can park their funds, earning some nominal regular income by way of rent, till the property prices rise. Investors then resort to resale of the property and earn handsome profits. Sometimes, property prices do not rise rapidly enough. In such cases too, the investor can liquidate the asset and relocate or consolidate the proceeds with other assets. c. Interest component in mortgage installments of residential properties is allowable as deduction against income in most countries. This becomes an attractive way to save taxes. d. Since the properties would be sold at some day in future, capital gains tax is
